Toronto has the largest number of condominiums of any jurisdiction in North America. Many of our condominiums have more residents than small towns. The budgets for larger condominiums can run into the millions of dollars. The job of board members and property managers is not an easy one, to say the least. To complicate matters, many corporations are part of an even larger development in which facilities such as recreation centres, parking garages, roads, gate arms, pools, party rooms, etc., are shared. These communities can have hundreds to thousands of residents.
The board of directors manages the affairs of the corporation. It is every corporation’s responsibility to control, manage and administer the common elements and the assets of the corporation on behalf of the owners. Most boards carry out their obligations with the assistance of many different professionals including property managers, accountants, lawyers, contractors and engineers.
A board’s obligation to manage the affairs of a corporation is not limited to the corporation itself but extends to the shared facilities and the larger development.
A conundrum that we, as lawyers, occasionally encounter is a project with several condominiums that share facilities, yet each “sister” corporation has its own management company, lawyer and accountant and uses different engineers and contractors. Why do some boards inherently feel that they have different interests than the other corporations in their communities? Too often one corporation tries to get a benefit at the expense of another corporation. This is not, in the writer’s view, how things should be in these communities.
Hiring different professionals will often ensure that each corporation goes down its own path. Different lawyers will lead to different legal opinions. Different managers will lead to different approaches to everything from maintenance and repair to enforcement of rules. Different reserve fund study engineers will lead to different levels of funding of reserves. Different contractors will lead to different qualities of work. All of these potential differences lead to breakdowns in the overall community, fighting between corporations, legal battles, stigmatization of the community, and, too often, negative affects on the market value of the units. Worst of all is the significant costs that result.
A well-run, maintained and uniform project is almost always in the best interests of each corporation. The whole community benefits when everyone understands that the interests of each corporation extends to the interests of the other corporations and the community as a whole.
What follows are some successful approaches that we have implemented that have helped to build and foster larger successful condominium communities.
Building community - A successful approach – The superboard
In one condominium, we created a superboard made of all the members of the boards of each corporation. A superboard is responsible to carry out the duties of the individual corporations, to oversee their management and the shared facilities. A superboard allows multiple corporations to effectively function as one. Instead of having a shared facilities committee that meets and reports back to each board, the superboard meets in place of the individual boards for virtually all purposes. Where the Condominium Act specifically requires approval by individual boards, the approval must still be obtained. However, it would be done at the superboard level by holding separate votes by the boards of each corporation. A superboard can be implemented verbally, by written agreement or by passing a by-law governing the management of the property. With a superboard, each corporation gives up a little bit of autonomy, but reaps the economic and communal based benefits of functioning as one larger cohesive community.
Combined owners meeting
Another successful approach we have used is to combine owners meetings. In one development made up of 3 corporations, the board of directors always meets together as one informal board. To take it a step further, instead of each corporation holding its own annual general meeting and discussing its own issues with its owners, the corporations hold a single combined owners meeting. In the combined owners meeting, issues are raised and discussed from the perspective of the whole development. It works very well. Where required, separate votes are held. Owners in each corporation are given a specific coloured voting card for the election of directors and the appointment of the auditor, or other specific matters that may require it. Each corporation receives its audited report and the shared facilities report. Owners do not just feel a part of their own corporation, but part of the larger community.
Every little bit helps
At a minimum, wherever possible, sister corporations in a development should strive to harmonize their administration and work to retain common management, lawyers, accountants, engineers and contractors. Opportunities to create a common sense of community should be seized whether through the holding of social events, combined owners meetings and/or community newsletters. Every effort should be made to foster harmony in the larger community, to do away with the notion of it is “us against them” and to promote the sense that “we are part of the same community”.